State Sen. Robert Holloman better get ready for hell, Henderson style.
The Ahoskie Democrat, who represented most of Vance County in his first term as Frank Ballance’s replacement but now has all of his district down east, has drawn the wrath of Gateway Community Development Corp. leader Margaret Ellis, among others, by sponsoring legislation to legalize payday lending.
The bill, S. 947, is on the agenda for the Senate Commerce Committee on Tuesday at 11 a.m.
Ellis issued a call to action against the bill and Holloman during Saturday’s Faith Summit at First Presbyterian Church.
The bill “is going to do whatever is necessary to keep payday lending in our communities — that’s killing our people,” Ellis said.
Payday lending — the common term for small, short-term, high-interest loans that are meant to carry a person until the next paycheck — has existed in a legal gray area in North Carolina since a state law authorizing the practice expired in 2001. State Attorney General Roy Cooper has periodically cracked down on such lenders, many of which rely on national banking charters to claim immunity to state regulation.
A report in March from the Center for Responsible Lending found that payday lending targets blacks, who see a disproportionate number of payday lending outlets in their neighborhoods.
Critics consider payday lending to be a predatory practice because the interest rates and fees can turn a $100 loan into a debt many times that size in a short time as the lender continually rolls the debt into bigger loans. Ellis cited the example of an elderly woman who borrowed $100 and six months to a year later found herself owing $700.
“If she couldn’t pay back the $100, how’s she going to pay the $700?” Ellis said.
She said Holloman sat in her office at Gateway and promised to fight payday lending, “and now he’s up there co-sponsoring it.”
Apologizing for her language to the Rev. Rick Brand, the pastor of the host church Saturday, Ellis said: “I’m mad as hell.”
Sen. Doug Berger, a Franklin County Democrat who represents all of Vance, said Holloman is pressuring him to support the payday-lending bill. But he told the Faith Summit that Holloman will first have to convince Ellis, whom Berger trusts on issues of predatory lending.
Unless the bill changes, Berger said, “I intend to vote against it.”
The issue provided an instant test for the kind of faith-based action envisioned by the Faith Summit, one of the most ambitious efforts yet by the Vance County Coalition Against Violence.
“I’m saying to you, pastors, go back and educate your people,” Ellis said. She urged them to tack payday lending onto the end of their Sunday sermons.
Ellis said she already has complained to Holloman by phone, and she’s prepared to take up the fight in person. She’s passionate enough about the issue, but she’s irate that, in her view, Holloman broke a promise to her and the people of Vance County.
The Rev. William Clayton of St. James Baptist Church, one of the organizers of the summit, volunteered to join Ellis in Raleigh on Tuesday at the committee meeting, to be held in Room 1027 of the Legislative Building. Clayton noted with disappointment that Holloman also is a minister.
The legislation in question would limit the amount of loans involving checks that are cashed, then held by the lender until a specified date. The maximum amount for such payday loans would be $500 or 25 percent of the borrower’s monthly income, whichever is less.
The bill would cap certain fees but does not put a limit on the interest rate. It would bar the common rollover practice — a provision of the bill says a person can’t pay off a payday loan with another payday loan from the same lender, and a borrower is supposed to avoid loans from other lenders. The bill appears to put the burden on the borrower to disclose he has unpaid payday loans when he goes to another lender, and lenders have no apparent motivation to check whether the borrower is truthful.
Holloman defended his support of the bill on “deferred deposit transactions” in an item in Thursday’s News & Observer titled “Payday Lending Reversal.”
Holloman said he spent three days talking to customers at payday lending outlets, and they told him they needed money to pay bills and didn’t have any other way to get it.
“You get to Raleigh and you forget who you are, where you come from and the people that you serve,” Ellis said Saturday.